(1) General:
 
 The company follows mercantile basis of accounting and recognizes
 income and expenses on accrual basis except otherwise mentioned. The
 accounts are prepared on historical cost basis on the principles of
 going concern. Accounting policies not specifically referred are
 consistent and in consonance with generally accepted accounting
 principles.
 
 (2) Use of Estimates :
 
 The presentation of financial statements in conformity with the
 generally accepted accounting principles requires estimates and
 assumptions to be made that affect the reportable amount of assets and
 liabilities on the date of financial statement and the reportable
 amount of revenue and expenses during the reporting period. Difference
 between the actual result and estimates are recognized in the year in
 which the results known/materialized.
 
 (3) Revenue Recognition:
 
 (i) Revenue in respect of sales of goods is recognized at the point of
 dispatch/ passage of title of goods to the customer. Sales are net of
 excise duty and sales tax.
 
 (ii) Insurance and other claims being unascertained are accounted on
 receipt basis.
 
 (4) Fixed Assets:
 
 Fixed Assets are stated at cost of acquisition or construction or at
 revalued amounts wherever such assets have been revalued less
 accumulated depreciation.
 
 (5) Depreciation :
 
 Depreciation on Fixed assets has been provided on written down value as
 per the rates prescribed in schedule XIV of the companies Act, 1956.
 
 Depreciation on additions has been provided on pro-rata basis from the
 date on which asset is capitalized/ put to use, wherever applicable.
 
 Fixed assets costing Rs.5,000/- or less are being fully depreciated in
 the year of acquisition.
 
 (6) Impairment of Assets :
 
 The carrying amounts of tangible fixed assets are reviewed for
 impairment, if events or changes in circumstances indicate that the
 carrying value of an asset may not be recoverable. If there are
 indicators of impairment, an assessment is made to determine whether
 the asset''s carrying value exceeds its recoverable amount. Whenever the
 carrying value of an asset exceeds its recoverable amount, impairment
 is charged to profit and loss account.
 
 Recoverable amounts are estimated for individual assets where feasible,
 otherwise to the relevant cash generating unit.
 
 (7) Investment:
 
 Investments are classified into current and long term investment.
 
 Long term investments are carried at cost.  Provision for diminution is
 made in the value of investment to recognize a decline if any, other
 than temporary.
 
 Current investments are stated at lower of cost and net realizable
 value.
 
 (8) Export Incentive:
 
 Export incentives on trading export such as import entitlement, advance
 license are accounted for on the realization/ sale thereof.
 
 (9) Employee Benefits:
 
 (i) Gratuity and leave encashment payable to employees, who are
 eligible are accounted f or on accrual basis as it will become due for
 payment on last day of accounting year.
 
 (ii) Provident fund paid/ payable during the year is charged to Profit
 & Loss Account.
 
 (10) Inventories:
 
 (i) Raw materials, stores & spares, consumables are valued at actual
 cost on FIFO basis.
 
 (ii) Stock-in-process is valued at weighted average cost which includes
 cost of raw material,
 
 stores & spares and other consumable consumed and manufacturing
 expenses, production overheads and depreciation.
 
 (iii) Finished goods are valued at cost or at estimated realizable
 value whichever is lower. Cost for this purpose includes raw materials,
 wages, manufacturing expenses, production overheads and depreciation.
 
 (iv) Scrap is valued at estimated realizable value.
 
 (v) Crazy/ wastage arising out of production is valued at net
 realizable value.
 
 (11) Foreign Currency Transactions:
 
 (i) Foreign Currency transactions are accounted for at the exchange
 rate prevailing on the date of such transaction, where such
 transactions are not covered by forward contracts.  Gains/ Losses
 arising out of the fluctuation in the exchange rate are accounted for
 on realization.
 
 (ii) Current assets & liabilities are translated at year-end rate.
 Exchange fluctuation, if any, are adjusted in profit and loss account
 (except related to fixed assets) during the year and the related
 current assets and liabilities accordingly restated in the balance
 sheet.
 
 (iii) In respect of foreign currency taken for acquisition of fixed
 assets, any fluctuation arising due to such transactions are adjusted
 in the cost of the respective fixed assets.
 
 (12) Taxation
 
 a) Current tax is the provision made for Income Tax liability, if any
 on profits in accordance with the provisions of the Income Tax Act,
 1961.
 
 b) Deferred tax is recognized on timing differences, being the
 difference resulting from the recognition of items in the financial
 statements and in examining the current income tax.
 
 c) Deferred tax assets are recognized on unabsorbed depreciation/
 business losses to the extent that there is virtual certainty supported
 by convincing evidences that sufficient future taxable income will be
 available against which such deferred tax assets can be realized and on
 expenses incurred but to be allowed on payment basis as per provision
 of the Income Tax Act, 1961
 
 d) Deferred tax assets and liabilities are measured using the tax rate
 and tax law that have been enacted on the Balance Sheet date.
 
 (13) Contingent Liabilities:
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognized but are disclosed in the
 notes.  Contingent assets are neither recognized nor disclosed in the
 financial statements.